We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Instructure Inc (NYSE:INST), and what that likely means for the prospects of the company and its stock.
Instructure Inc (NYSE:INST) investors should be aware of an increase in support from the world’s most successful money managers lately. INST was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. There were 5 hedge funds in our database with INST holdings at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Albany Molecular Research, Inc. (NASDAQ:AMRI) and Anika Therapeutics, Inc. (NASDAQ:ANIK) to gather more data points.
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What does the smart money think about Instructure Inc (NYSE:INST)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 80% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards INST over the last 5 quarters, with all 9 bullish hedge fund positions having been added this year after the stock’s Q4 2015 IPO. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Richard Driehaus’ Driehaus Capital has the number one position in Instructure Inc (NYSE:INST), worth close to $11.4 million. The second most bullish fund manager is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $5.8 million position. Remaining peers with similar optimism consist of Philip Hempleman’s Ardsley Partners, George McCabe’s Portolan Capital Management, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-micro-cap stocks.
As industry-wide interest jumped, key hedge funds were leading the bulls’ herd. Ardsley Partners established the most outsized position in Instructure Inc (NYSE:INST), having $5.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $1.8 million position during the quarter. The following funds were also among the new INST investors: John Overdeck and David Siegel’s Two Sigma Advisors and Frank Slattery’s Symmetry Peak Management.
Let’s now review hedge fund activity in other stocks similar to Instructure Inc (NYSE:INST). We will take a look at Albany Molecular Research, Inc. (NASDAQ:AMRI), Anika Therapeutics, Inc. (NASDAQ:ANIK), and VASCO Data Security International, Inc. (NASDAQ:VDSI). This group of stocks’ market values are closest to INST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRI | 13 | 93179 | 1 |
| ANIK | 17 | 59379 | 5 |
| VDSI | 16 | 63008 | 2 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $32 million in INST’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand Albany Molecular Research, Inc. (NASDAQ:AMRI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Instructure Inc (NYSE:INST) is even less popular than AMRI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
Disclosure: None
